Wall Street Sees Best Quarter After 1998: 5 Top Winners

Just three months ago, investors were concerned about the end to the bull run with major U.S. stock indexes tumbling nearly 35% on Mar 23 from their mid-February peaks.

 

Investors were particularly tensed about the economic impact of the fast spread of coronavirus across the globe. Several companies raised the alarm about the outbreak weighing on earnings and disrupting supply chains. What’s more, the National Bureau of Economic Research added that the economy plunged into recession after the pandemic resulted in nationwide shutdown and uptick in unemployment.

 

But since the lows seen in late March, the indexes bounced bank with the broader S&P 500 rallying around 20% in the second quarter, the highest quarterly gain since 1998. It’s worth pointing out that the S&P 500 tanked 20% in the first quarter, its steepest quarterly decline since the financial crisis of the fourth quarter of 2008.

 

The Dow also booked its best quarter since 1987, while the tech-heavy Nasdaq registered its best quarter since 1999. And its during the course of the second quarter that the Dow and the Nasdaq hit the coveted 26,000 and 10,000 marks, respectively. The S&P 500, in the meantime, hit 3,100 on Jun 30.

 

The gains have been fueled by unprecedented levels of fiscal and monetary stimulus. The Trump administration had approved more than a trillion-dollar relief plan that will directly benefit American consumers and business houses. The Fed, by the way, has trimmed borrowing costs and pumped billions of dollars into the banking system to sustain the credit flow. Policy makers unanimously agreed to trim benchmark federal funds rate a full percentage point to a range of zero to 0.25%.

 

Improving economic data also fueled optimism on Wall Street. The index of consumer confidence jumped to 98.1 in June from a revised 85.9 in May, its biggest one-month increase since late 2011, per the Conference Board. To top it, consumers’ outlook for income, business and labor market conditions climbed to a four-month high of 106.

 

Sentiments improved as optimism around a possible economic recovery increased as businesses reopened. Such a belief gained momentum on May’s stunning jobs report. A mind-boggling 2.5 million U.S. jobs were regained in May in contrast to several economists’ forecast of a loss of 7.25 million jobs.

 

Similarly, sales at U.S. retailers rose 17.7% in May, the biggest monthly jump ever. May’s retail sales figure easily surpassed analysts’ expectations of an 8.5% increase. Notably, retail sales account for just under a third of GDP and May’s rebound will invariably lead to an upward revision in second-quarter GDP.

 

Talking about economic recovery, Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Steven Mnuchin reassured that they are committed to anchor the U.S. economy through the public health crisis.

 

Both of them said that they are looking forward to extending the Fed’s established 11 emergency lending facilities and increase coronavirus aid in the next phase of stimulus.

 

5 Top-Performing Stocks of Q2

 

Given the aforesaid positives, investing in some of the stocks that have so far not only made the most of the second quarter but are also poised to gain further seems judicious. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

 

Workhorse Group, Inc. WKHS is engaged in designing, developing, manufacturing and selling medium-duty trucks. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 43.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 385.7%. Workhorse Group’s shares soared 790.2% in the second quarter.

 

Veritone, Inc. VERI is an AI company. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 10.7% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 46.5%. Veritone’s shares climbed 509% in the second quarter.

 

Microvision, Inc. MVIS develops information display and related technologies that allow electronically generated images and information to be projected onto a viewer’s eyes. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 40% north over the past 60 days. The company’s expected earnings growth rate for the next quarter is 80%. Microvision’s shares jumped 498.2% in the second quarter.

 

Energy Focus, Inc. EFOI is a leading provider and innovator of energy efficient LED lighting products. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved 40% north over the past 60 days. The company’s expected earnings growth rate for the next quarter is 25%. Energy Focus’ shares surged 378.6% in the second quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Wayfair Inc. W is the world's leading online sellers of home goods products, consisting of furniture and home decor. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 51.2% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 138.6%. Wayfair’ shares soared 180% in the second quarter.

 

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